Aroundtown boosts FFO, growth at Grand City Properties

Christian Windfuhr - Grand City

CEO Christian Windfuhr commented, "Grand City is on the right path of making 2016 a strong and profitable year, capitalising on our tremendous growth in 2015 and the steadily unfolding potential in our portfolio."

The Euronext and Frankfurt-listed Aroundtown Property, which specialises in investing in turnaround assets in Germany through stakes in several listed firms, said first-quarter funds from operations increased 73% to €33m on the back of portfolio growth.

It said it plans further expansion this year, backed by a strong war-chest stemming from a €267m equity increase and a €600m, 6-year bond issue paying 1.5% annually, both from April. This saw EPRA NAV climbing to €3.3 billion at the end of March 2016 and to €3.6 billion on a pro forma basis, including the recent equity capital issuance.

The company said its loan-to-value ratio fell to 19.3% from 38.5% after the measures. “Due to our low debt level and strong firepower for acquisitions, the company has ample room to follow attractive growth opportunities,” the firm said in its results statement.

Rental and operating income rose by 149% on 1Q15 to €50m, while the firm’s net profit fell to €230m from €285m. EPRA net asset value rose by 17% to €3.3bn and to €3.6bn when including the equity increase, the company said.

The Cyprus-incorporated Aroundtown holds a 32% stake in the Luxembourg-listed Grand City Properties, a specialist in distressed German housing with €4bn of holdings. It also has a stake in PrimeCity, listed in Paris with a €917m hotel portfolio in Germany, and Camelbay, a private 100% owned subsidiary which manages €2.9bn of multi-tenant German commercial properties. Aroundtown listed on Euronext in Paris last year.

Meanwhile Grand City Properties, whose share price has more than tripled over the past three years, saw its own FFO rise by 50% to €38m on a like-for-like basis in the first quarter on the back of strong portfolio growth. Net profit increased to €90m from €80m a year earlier.

The acquisitive Grand City boosted its portfolio last year by 33,000 residential units, and has added a further 2,000 this year, bringing its holding up to over 80,000 apartment units throughout Germany, valued at €4bn. Its holdings generate annual rental and operating income of €423m and FFO of €155m, up from €128m in 2015.

Vacancy rates decreased to below 10% of lettable space by May 2016, down from 12.3% last year and the company was achieving in-place rents of €5.30 per sqm (per month) compared to €5.20 in May 2015.

The company ended Q1 with an LTV of 40% and an equity ratio of 46%, while the company's overall cost of debt is 1.6%. CEO Christian Windfuhr commented, "Grand City is on the right path of making 2016 a strong and profitable year, capitalising on our tremendous growth in 2015 and the steadily unfolding potential in our portfolio."